0% APR Car Deals: Is There A Catch? (2024) (2024)

Zero-interest financing is real, but it may not be the best deal

Updated:Jun 25, 2024

0% APR Car Deals: Is There A Catch? (2024) (1)

Written by:Daniel Robinson

0% APR Car Deals: Is There A Catch? (2024) (2)

Written by:Daniel RobinsonWriter

Daniel Robinson is a writer based in Greenville, N.C. with expertise in auto insurance, loans, warranty options and more. Away from the keyboard, Daniel spends time with his wife and son, plays guitar and obsesses over the Beatles and Baltimore Orioles.

Writer

0% APR Car Deals: Is There A Catch? (2024) (3)

Edited by:Rashawn Mitchner

0% APR Car Deals: Is There A Catch? (2024) (4)

Edited by:Rashawn MitchnerSenior Editor

RaShawn Mitchner is a MarketWatch Guides team senior editor covering personal finance topics and insurance. She’s spent over a decade writing and editing articles about how to save money on travel, entertainment, household services and more.

Senior Editor

If you’ve seen advertisements for 0% APR car deals, you might have thought they’re too good to be true. Interest is how lenders make money, so how is it possible that they don’t charge interest on a loan? The answer is that lenders get that money back in other ways.

We at the Guides Auto Team uncover the truth about zero-interest financing deals. Our team researched which lenders offer these rates, how they do it and whether getting a 0% APR car deal makes financial sense. We’ve also reviewed the providers with best auto loan rates and best auto refinance rates of 2022 to help you find a lender that’s right for you.

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Auto Loan RefinanceBest 72-Month Auto Loan RatesCan I Refinance My Mortgage and Auto Loan at the Same Time?Car Loan CalculatorBest Auto Refinance RatesHow To Pay Off Your Car Loan FasterShould I Pay off My Car Loan Early?Complete Auto Loan Glossary: Terms You Should Know (Guide)

Filters

Location

Loan Term (Months)

12-84

Min. Credit Score

300-680

Lending PartnerLoan TypeLoan Term (Months)Min. APR (%)Min. Credit ScoreSee More
Refinance Loan48 – 845.29550Compare Rates
Refinance Loan12 – 725.49575Compare Rates
New or Used Car Loan12 – 847.24575Compare Rates
Refinance Loan12 – 486.24620Compare Rates
Refinance Loan36 – 844.99640Compare Rates
New Car Loan12 – 840.00300Compare Rates
Refinance Loan36 – 725.99680Compare Rates
Lending PartnerLoan TypeLoan Term (Months)Min. APR (%)Min. Credit ScoreSee More
Refinance Loan48 – 845.29550Compare Rates
Refinance Loan12 – 725.49575Compare Rates
New or Used Car Loan12 – 847.24575Compare Rates
Refinance Loan12 – 486.24620Compare Rates
Refinance Loan36 – 844.99640Compare Rates
New Car Loan12 – 840.00300Compare Rates
Refinance Loan36 – 725.99680Compare Rates

No results were found.

Why You Can Trust the MarketWatch Guides Team

Here’s a breakdown of how we reviewed and rated the top auto loan providers

24

Providers ReviewedWe’ve reviewed two dozen of the top auto loan providers, from large banks and credit unions such as Chase and PenFed Credit Union to auto loan specialists like AutoPay.

295

Research HoursOur team has spent 295 hours diving into each lender’s industry standing, availability, loan details, average rates and customer service.

950

Reviews AnalyzedOur team analyzed hundreds of reviews to better understand how customers feel about their auto loan providers throughout the entire loan experience.

925

Data Points AnalyzedWe regularly collect data on lenders’ loan offerings, including APRs and interest rates, fees and discounts, and minimum and maximum loan terms.

Learn more about our methodology and editorial guidelines.

What does 0% APR mean?

The annual percentage rate (APR) is the yearly interest charged on a loan, plus any fees. When a lender or dealership offers a 0% APR car deal, it means that you’ll pay no interest over the life of the loan.

APR vs. interest rate

You may see the terms “APR” and “interest rate” used interchangeably, but they’re not the same. While the interest rate is what you’re charged for the money you borrow, the APR is that rate plus other costs and fees that come with the loan. That’s why the APR you see is often higher than the interest rate.

What is the average auto loan interest rate?

The average auto loan interest rate is 3.86% for new cars and 8.21% for used cars, according to Experian’s Q4 2021 State of the Auto Finance Market report. However, these rates won’t necessarily give you a clear picture of what you might pay for a car loan.

This is because rates are based on a number of factors about you and your vehicle, including the items below:

  • Credit score
  • Credit history
  • Loan term
  • Income
  • Required monthly debt payments
  • Down payment/trade-in value
  • Vehicle purchase price
  • Vehicle value

Average car loan interest rates by credit score

Of all the factors that contribute to your interest rate, your credit score is the most influential. Depending on your credit score, you fall into one of several categories of borrowers, sometimes known as credit bands.

While other factors will cause your rates to vary, this table shows the average auto loan interest rate by credit score, according to data from Experian:

0% APR Car Deals: Is There A Catch? (2024) (19)

How do 0% APR car deals work?

At first glance, 0% APR car deals might seem like getting something for nothing. But it’s not actually that simple. While lenders still make profits on these deals, how they make that money is different.

In most cases, a 0% APR car deal comes from the automaker’s finance company, such as Chrysler Capital or Hyundai Motor Finance. To make up for not earning interest on the loan, the manufacturer may offer the vehicle at a higher price or try to sell add-ons such as extended car warranties. The interest-free loan is meant to make shoppers more inclined to buy a vehicle and these extras.

Is there a catch to 0% APR car deals?

There isn’t necessarily a catch to 0% APR financing offers. These deals are real, and you won’t pay any interest on your car loan. However, that doesn’t mean they’re the best deal for you. Even without interest payments, you could still pay more overall.

That’s because taking a 0% financing deal will usually make you ineligible for manufacturer rebates offered on new cars. You may have heard these incentives referred to as “bonus cash” or “cash back” in commercials.

A rebate may be more than what you’d pay in interest on a typical loan, especially since new car loans generally have the lowest interest rates. Reading all offer disclosures and using an auto loan calculator can help you determine whether you’d save more money with a rebate or 0% financing.

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* The calculators used on this website are being provided for educational purposes only. Data will not be collected or stored. The results are estimates based on information you provide and may not reflect actual pricing of your quote.

Downsides of 0% APR car deals

As appealing as 0% APR car deals might sound, they do have downsides.

  • Shorter loan terms: You may find 0% APR car deals with 72- or 84-month loan terms, but they’re rare. Usually, these offers come with shorter terms, such as 48 months. That can mean higher monthly payments.
  • No rebate: In most cases, taking a 0% APR car deal means you can’t access the rebates sometimes offered by manufacturers and car dealers. A rebate may be worth more than what you’d pay in interest if you’re eligible for the best auto loan rates.
  • Limited selection: Car dealerships typically only offer zero-interest financing on new vehicles or lightly used ones. And in many cases, they’re only available on certain models. If you’re after a 0% APR car deal, you may not have as many choices of cars to buy.

How to qualify for 0% APR car deals

Not everyone will have the option to take a 0% APR car loan. These deals are generally only offered to buyers who fit specific criteria.

  • Good credit: You’ll likely need a good or excellent credit score to qualify for a 0% APR car deal.
  • Large down payment: You can find no-money-down, 0% interest auto loans. However, it’s much more common for these loans to require a sizable down payment.
  • Low debt-to-income (DTI) ratio: Your DTI is the ratio of how much you owe for debts each month compared to your monthly income. The lower that ratio, the more likely you are to be approved for zero-interest financing.
  • Stable income: It’s important to lenders that your income be dependable. Being able to show a reliable income through employment or other means will help you qualify for a 0% APR car deal.

Bottom line on 0% APR car deals

Whether you should take a 0% APR car deal for your next auto purchase comes down to which option will save you the most money based on your needs. Thankfully, there are tools available to help you figure out the best move for you.

If you’re looking at a particular make and model, such as a certain SUV or pickup truck, check whether the manufacturer offers a rebate. You can search online to find the amount of the rebate. Then, use an auto loan calculator to see how much you would likely pay in interest with a different loan.

Once you know how much you would pay in interest, you can compare that amount to the rebate. Knowing how much you will — or won’t — save by taking a 0% APR car deal instead of a rebate can help you decide which financing option is right for you.

Top recommendations for auto loan providers

Even if you think a 0% APR car deal is the best option for your next car purchase, it’s worth considering other options. After all, there’s more to financing than just the APR. Applying for multiple auto loans within 45 days won’t impact your FICO credit score any more than applying for just one in that time, and shopping around can help you compare offers. We recommend starting your search with these providers.

Filters

Location

Loan Term (Months)

12-84

Min. Credit Score

300-680

Lending PartnerLoan TypeLoan Term (Months)Min. APR (%)Min. Credit ScoreSee More
Refinance Loan48 – 845.29550Compare Rates
Refinance Loan12 – 725.49575Compare Rates
New or Used Car Loan12 – 847.24575Compare Rates
Refinance Loan12 – 486.24620Compare Rates
Refinance Loan36 – 844.99640Compare Rates
New Car Loan12 – 840.00300Compare Rates
Refinance Loan36 – 725.99680Compare Rates
Lending PartnerLoan TypeLoan Term (Months)Min. APR (%)Min. Credit ScoreSee More
Refinance Loan48 – 845.29550Compare Rates
Refinance Loan12 – 725.49575Compare Rates
New or Used Car Loan12 – 847.24575Compare Rates
Refinance Loan12 – 486.24620Compare Rates
Refinance Loan36 – 844.99640Compare Rates
New Car Loan12 – 840.00300Compare Rates
Refinance Loan36 – 725.99680Compare Rates

No results were found.

myAutoloan: Most Popular Marketplace

As an auto financing marketplace, myAutoloan gives you the chance to get multiple loan offers all in one place. Once you enter your information on the website, you’ll start receiving offers from lenders. Borrowers might find this approach easier than applying with each lender individually. In addition, myAutoloan is open to borrowers with a minimum credit score of 575, making it an option for a wider range of people than many other providers.

Keep reading: myAutoloan review

Auto Credit Express: Good Option for Bad Credit

Auto Credit Express works with dealerships to provide financing options for people of all financial situations, but the company specializes in bad credit car loans. It claims to have the largest selection of bad credit car dealers in the U.S., and even people with poor credit or a previous bankruptcy can find financing through the provider. Borrowers with pristine credit might find better deals elsewhere, but if your credit history is less than stellar, Auto Credit Express is certainly worth a look.

Keep reading: Auto Credit Express review

Frequently Asked Questions

While zero-down, 0% APR car deals do exist, they’re not very common. They are typically only available to borrowers with very good credit scores and little revolving debt compared to their income.

Credit ratings don’t consider interest rates as part of your credit score calculation. As with any loan, making on-time payments on a 0% APR auto loan will help your credit score, while missing payments or making them late will likely cause your score to drop.

According to FICO, a good credit score is one that’s between 670 and 739. Scores of 740 and above are considered excellent and typically get borrowers the lowest interest rates on loans.

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best auto loan companies. We collected data on dozens of loan providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the companies that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Reputation (25% of total score): Our research team considered ratings from industry experts and each lender’s years in business when giving this score.
  • Rates (25% of total score): Auto loan providers with low APRs and high loan amounts scored highest in this category.
  • Availability (25% of total score): Companies that cover a variety of circumstances are more likely to meet consumer needs.
  • Customer Experience (25% of total score): This score is based on customer satisfaction ratings and transparency. We also considered the responsiveness and helpfulness of each lender’s customer service team.

*Data accurate at time of publication.

If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides.com.

0% APR Car Deals: Is There A Catch? (2024) (34)

Daniel RobinsonWriter

Daniel Robinson is a writer based in Greenville, N.C. with expertise in auto insurance, loans, warranty options and more. Away from the keyboard, Daniel spends time with his wife and son, plays guitar and obsesses over the Beatles and Baltimore Orioles.

0% APR Car Deals: Is There A Catch? (2024) (35)

Rashawn MitchnerSenior Editor

RaShawn Mitchner is a MarketWatch Guides team senior editor covering personal finance topics and insurance. She’s spent over a decade writing and editing articles about how to save money on travel, entertainment, household services and more.

0% APR Car Deals: Is There A Catch? (2024) (2024)

FAQs

0% APR Car Deals: Is There A Catch? (2024)? ›

There isn't necessarily a catch to 0% APR financing offers. These deals are real, and you won't pay any interest on your car loan. However, that doesn't mean they're the best deal for you. Even without interest payments, you could still pay more overall.

Will car interest rates go down in 2024? ›

Auto loan rates for new and used vehicle purchases fell in the first quarter of 2024 to 6.73% and 11.91%, respectively, down slightly from the 15-year highs we saw at the end of 2023, according to Experian.

Is 0% financing worth it? ›

In many cases, qualifying for 0% also means forgoing any manufacturer rebates that may have been associated with the sale. Zero-percent financing deals can work well for those who have a high income and excellent credit, but in most cases 0% really isn't as great as it appears.

What credit score do you need for 0% APR on a car? ›

Lenders want to ensure you have a near-perfect history of making payments and handling your debt before offering you no-interest financing. An excellent credit score — 781 or higher — will get you the best deal on financing, but you can still qualify for a competitive interest rate if your score is 670 or higher.

Is it possible to get 0% interest on a car loan? ›

Can You Get a 0% Interest Rate on a Car? Yes, it is possible to get a 0% interest rate loan when you buy a car. In fact, it is a common financial incentive in the automotive sales industry. You might even find opportunities to get a 0% APR loan with no money down if you qualify for both offers.

Is 2024 a good time to buy a car? ›

Experts say that 2024 will be the best year to purchase a new car since 2019. As interest rates slowly drop throughout the remainder of the year, payments will become more manageable. Don't overlook manufacturer rate promotions, as they can save you thousands of dollars.

Will car prices come down in 2024? ›

New and used car prices continued to fall in the first quarter of 2024. Industry experts predict that used car prices could decrease by as much as 14% on average by the end of 20246.

What is the downside to 0 deals? ›

You must be careful to avoid getting wrapped up in the thrill of 0% deals. Although the interest costs are listed as zero, the true numbers are built into the price of the loan. Unless you're aware of this before signing on the dotted line, you may be signing into a less than stellar deal.

Why avoid zero percent interest? ›

Avoiding interest is always a good goal, but zero-interest loans can lead buyers to overspend and come with a lot of strings attached. Carefully evaluate your purchase—is this what you intended to buy, and will you realistically pay off the loan within the given time?

Does 0% financing affect credit score? ›

Key takeaways

However, a 0 percent intro APR card can hurt your credit if it causes you to carry a higher balance than usual or if you carry your balance beyond the introductory 0 percent APR period. Applying for a 0 percent intro APR card could temporarily cause your credit score to drop.

Why 0% APR might not be good for your credit? ›

A 0% APR is not good for your credit if you overspend, as high credit utilization and missed payments hurt your credit score. If you end up carrying a balance from month to month after the 0% period ends, you will also owe expensive interest charges, making it hard to pay your bills on time and build credit.

Can you buy a car with a credit card 0% APR? ›

Interest rates

One way to lower the cost of buying a car with your credit card is to take advantage of 0% intro APR offers on purchases. These promotions are typically less than two years, so they have a shorter term than most car loans.

Is there a minimum payment with 0% APR? ›

Even with a 0% APR card, you'll still have to make monthly minimum payments — usually a small percentage of your balance. And if your payment is late, even by a single day, your card issuer could cancel the 0% offer and reset your card's interest rate to the ongoing APR.

Is 0% APR worth it? ›

While 0% APR financing seems like a great deal, it's not always the best option when you consider your budget and overall financial situation. You'd prefer a used car: With a 0% APR deal, you'll likely have to purchase a new car, which may cost more than you can afford.

Is 0 interest rate good for a car? ›

If you can afford a loan, 0% financing is always a good option. It is not wise to purchase a car just because the 0% financing offers sound too good to ignore. Make sure you negotiate the best price by taking your time, giving it some thought, and researching.

How old of a car can I finance for 60 months? ›

There's no universal maximum loan term for a used car. However, lenders and banks typically follow common guidelines, especially as it relates to age and mileage. For example, you usually can't finance a used car older than 10 years with a five year loan.

How much will interest rates drop in 2024? ›

Mortgage rate predictions 2024

The MBA forecast suggests that 30-year mortgage rates will fall to the 6.6% by the end of 2024, while Fannie Mae and NAR predict rates will end the year around 6.7%.

Will cars be cheaper in 2025? ›

Dealerships are making way for 2025 models, offering deeper discounts on select cars. Some dealers may also be willing to offer additional discounts, especially on outgoing 2024 models. Make sure to shop around to find the best deal on the car you want to purchase.

Will interest rates go down again in 2025? ›

The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%. Meanwhile, Wells Fargo's model expects 5.8%, and the Mortgage Bankers Association estimates 5.5%. ResiClub takes all forecasts with a grain of salt.

Will repo rate decrease in 2024? ›

Nearly half of economists surveyed, 33 of 71, predicted that the RBI will opt for first repo rate cut in Q4 2024, giving a median forecast of 6.25%. Earlier in April, most economists expected the first cut in Q3.

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